Darden announces sale of Red Lobster for $2.1B

This Thursday, Sept. 6, 2012, file photo, shows a Red Lobster restaurant in Hialeah, Fla. After new ad campaigns touting the quality of its food failed to spark sales, Darden Restaurants, the parent company of Olive Garden and Red Lobster, on Thursday, Dec. 19, 2013 said it is looking to either spin off or sell Red Lobster, part of its plan to boost shareholder value. (AP Photo/Alan Diaz, File)

NEW YORK (AP) — Darden Restaurants says it will sell its Red Lobster chain to investment firm Golden Gate Capital in a $2.1 billion cash deal.

The company, which also owns Olive Garden, had announced late last year that it planned to either spin off or sell Red Lobster to improve its financial performance.

Both Olive Garden and Red Lobster have been losing customers in recent years, and the company has tried various menu changes and different marketing campaigns in hopes of winning back business.

But Darden sees more potential in fixing Olive Garden, which the company says fits with its other, smaller restaurant chains that cater to customers willing to spend more. By contrast, Darden CEO Clarence Otis said Red Lobster has been unable to capture higher-income customers.

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Investors have nevertheless challenged Darden’s plans to sell only Red Lobster, saying that the company should separate Olive Garden and Red Lobster as a pair from the more successful smaller chains, which include Longhorn Steakhouse and Capital Grille.

There are about 700 Red Lobster locations and 830 Olive Gardens in North America.

Shares of Darden, based in Orlando, Florida, slipped 1 percent to $50.10 in premarket trading.